Jury to weigh fraud charges against NYC mayoral hopeful's aides

NEW YORK, May 2 (Reuters) - A federal jury was set to weighfraud charges on Thursday against two former fundraisingassociates of John Liu, a Democratic candidate for mayor of NewYork City.

The U.S. Attorney's Office said Jia Hou, the Liu campaign'sformer treasurer, and Xing Wu Pan, a fundraiser for Liu, werepart of a coordinated conspiracy by the campaign to fraudulentlyget money from the city's donation-matching program, thwartedonly by a federal investigation.

Defense lawyers for Hou and Pan in closing arguments onWednesday said the two were "collateral damage" in thegovernment's "obsessive" probe of Liu's campaign.

The jury, in U.S. district court in Manhattan, is due tobegin deliberating the case on Thursday.

Liu, now the city's comptroller, has not been charged withany crimes and denies knowing of any wrongdoing in his campaignto succeed Michael Bloomberg as mayor this year.

Liu ranked third in the large Democratic mayoral field,according to an NBC New York-Marist poll conducted earlier thismonth.

Hou and Pan were barely acquainted, their defense lawyerstold the jury.

Pan's lawyer said his client agreed to recruit more than adozen so-called straw donors only at the persistent urging of awealthy Texan businessman he considered to be a friend and apossible future business associate.

Pan learned later that the man was an undercover FBI agentinvestigating Liu's campaign. Straw donors are illegallyreimbursed as a way of circumventing limits on individualdonations.

"Mr. Pan is collateral damage in the government's obsessivepursuit in making a criminal case against John Liu," Pan'slawyer Irwin Rochman told the jury in his closing argument.

"I don't represent John Liu. I don't give a damn about JohnLiu, but that's how we got here, and they are now struggling tomake this a federal case. This case doesn't belong in thiscourtroom."

Rochman told the jury that Pan admitted recruiting strawdonors for the undercover agent, and in doing so almostcertainly broke New York state laws, although he argued Pan didthis only as a result of government entrapment he described as amonths-long "courtship" by the undercover agent involvinglunches, fancy dinners and many telephone conversations.

Judge Richard Sullivan instructed jurors on Wednesday thatthey can convict Pan or Hou of the federal crime of attemptedwire fraud only if they find that the defendants' actions werepart of a deliberate attempt to defraud the city'sdonation-matching program.

Pan never thought that far ahead, Rochman argued. He barelyunderstood the program, Rochman said, pointing to FBItranscripts in which Pan repeatedly garbles the way the programworks. His only goal was to please someone he "naively" thoughthad become his friend by getting the undercover agent, wiredwith a hidden camera, a private meeting with Liu at afundraising event, Rochman said.

Half the straw donors Pan found to secure the meeting werefrom outside New York City, Rochman said, and thereforeineligible for matching funds. And once the agent got hismeeting with Liu, Pan paid scant attention to the fate of thedonations he had arranged.

Federal prosecutors have cited only one instance of Houapparently soliciting a straw donor herself: an online chat withan ex-boyfriend the night before a fundraising deadline in whichHou told him she would reimburse him if she processed hisdonation. Hou's lawyers said her offer was a polite gesture andthat both knew he would never accept reimbursement from her.

Both sides agreed that the ex-boyfriend was a New Jerseyresident and not eligible for the matching-funds program, andthat his donation was never processed because the campaign's $1million goal was reached the next day.

But in their closing argument on Tuesday, prosecutors saidHou's apparent willingness to find a straw donor and Pan'srecruitment of several of them could not be a coincidence, andwere evidence of a "playbook" used by the Liu campaign in a"corrupt scheme to undermine an election." They told the jurythat Liu must have known that straw donors were being used inhis campaign, a charge he denies.

Pan, of Hudson County in New Jersey, and Hou, of QueensCounty in New York, each face one count of conspiracy to commitwire fraud and one count of attempting to commit wire fraud.Each charge carries a maximum sentence of 20 years in prison.Hou also has been charged with obstruction of justice and makingfalse statements.